Voters deserve a say as counties consider shifting property tax burden to sales taxes

Meade, Pennington, Custer and Codington are among the counties that have enacted the tax. Codington County opponents are gathering signatures to force a public vote. Brown and Fall River counties decided voters should make the choice. Other counties are still studying it.

The benefit goes to owner-occupied homeowners, who will receive a reduction in the county government portion of their property taxes. In Codington County, the projected reduction is about 23% of the total property tax bill.

That is real money. But everyone who makes taxable purchases in the counties that enact the tax will help pay for it — including many who can least afford another tax.

Start with renters. About one-third of South Dakota households rent. They will pay more tax on clothing, furniture, restaurant meals and everyday purchases, but receive no direct property tax credit.

The renter share is higher in parts of western South Dakota. Census data show about 37% of Rapid City households rent and 52% rent in Box Elder. Those renters will help pay the county sales tax but are unlikely to receive a benefit. Nothing in the law requires a landlord to pass along property tax savings.

The tax also lands harder on lower-income South Dakotans. Households in the lowest 20% of income pay about 7.4% of their income in sales and excise taxes. Among higher-income households, the share falls below 4% and keeps dropping as income rises.

Same cash register. Very different bite.

Farmers and ranchers have another reason to look closely. Not every farm expense is taxable. Seed, fertilizer, livestock feed and agricultural fuel are exempt inputs, while machinery and titled vehicles are handled under separate tax laws.

But farms and ranches still make taxable purchases for fencing, tools, shop equipment, building supplies and other things most households never think about.

The first property tax benefit goes to the farmhouse and homesite. Agricultural land receives nothing until the county generates enough revenue to fully offset its owner-occupied levy.

Then there is geography. Tourism counties have an advantage. Black Hills visitors buy gas, eat supper and fill the backseat with souvenirs proving they survived Needles Highway.

Most counties, however, do not have Mount Rushmore or the Sturgis Motorcycle Rally. Their outside shoppers are usually other South Dakotans.

Governor signs bills to reduce homeowner property taxes with higher sales taxes

A Hamlin County renter shopping in Watertown may help finance relief for Codington County homeowners. Sioux Falls, Rapid City, Aberdeen, Watertown and Mitchell pull spending from surrounding counties, while smaller counties have no similar advantage.

Tourism counties can shift part of the bill to visitors. Regional shopping counties mostly shift it among South Dakotans.

Same half-cent. Very different results.

That is why the potential Codington County referendum matters.

County commissioners may have the legal authority to impose a tax paid by a broad group in order to provide a direct benefit to a narrower group. But legal authority and political fairness are not the same.

If the idea is sound, explain it. Put the numbers on the table. Tell renters, homeowners, farmers and businesses what they are likely to pay and who benefits.

Then let them vote.

A statewide Mason-Dixon poll commissioned by South Dakota News Watch and the Chiesman Center for Democracy found 49% of South Dakota registered voters opposed giving counties the authority to exchange higher sales taxes for lower property taxes, while 33% supported it and 17% were undecided.

That sounds like a conversation worth having before the tax is imposed, not afterward.

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